Questions
and Answers
To
Raising
Bond Capital
In
Servants
of Yahweh,
Charity
Registration No. 1088668
Prepared
by Servants of Yahweh
483
Green Lanes
N13
4BS
Email: servantsofyahweh@serveyahweh.org.uk
May
2005
Principle Activities
The charity engages in: (a) the advancement of the Christian religion; and (b) the relief of poverty.
Why does the charity reward its existing bondholders who facilitate in its raising its bond capital?
Answer
The charity currently needs additional capital to better perform its operations. Existing bondholders, who know and understand the charity's operational and financial needs, can indeed facilitate in the provision of these needs by introducing other persons to the charity. The persons so introduced may indeed become additional bondholders of the charity, thereby helping the charity fulfil its financial needs. To give an incentive to bondholders to help the charity in the fulfilment of these needs the charity rewards them for their introductions resulting in new bond capital being raised for it.
Why has the charity set £10 as the minimum value for lump sum application of its bonds?
Answer
The charity needs as much additional bond capital as it can currently raise to facilitate the better performance of its charitable activities. Therefore the larger the amount of bond subscription by each bondholder the better it is for the charity. But the charity must also give thought to the financial resources of potential and existing bondholders, and what it can reasonably expect them to raise in buying the charity's bonds. £10 is therefore a compromise between these two opposing forces, not being too high to deter bondholders investing in an undertaking they desire to invest it, and not being too low to prevent the charity adequately raising the capital its needs for its operations.
Does the charity accept instalment payment for bond applications?
Answer
Yes. The minimum monthly requirement is £10, payable by standing order. In this manner a bondholder's investment can gradually build up without his experiencing any financial pain in acquiring those bonds.
Is the fee income an existing bondholder earns on account of introducing a new bondholder guaranteed?
Answer
Yes – at 0.1% per month of the qualifying bond capital raised.
As the charity has not made arrangements as to the listing of its bonds on a recognised investment exchange, how may a bondholder who desires to sell his bonds in the charity do so?
Answer
The bondholder can redeem his bonds after holding them from a period of at least one year. This simply means that he can ask the charity to buy back the bonds from him, at a price including both the nominal value of the bonds and accumulated interest on them.
Alternatively, the bondholder can sell his bonds, at any time, to another person willing to purchase them from him at a price agreeable to both of them.
Can a bondholder buy bonds worth more than £10?
Answer
Yes. The charity desires that bondholders buy bonds worth more than £10, as the extra funds raised enables the charity to undertake more of its activities.
Is there a maximum amount of bonds that a bondholder can buy?
Answer
No. Nevertheless, the charity will accept offers for bonds only for amounts it can deliver any stipulated investment return.
Can a bondholder introduce more than 5 new bondholders?
Answer
Yes. There is no limit on the number of new bondholders an existing bondholder can introduce, as there is no requirement on an existing bondholder to introduce new bondholders. An existing bondholder can therefore introduce as many or as few new bondholders as he or she chooses.
What advantage does a bondholder have if he or she does not introduce a new bondholder?
Answer
The investment return on his bonds. This is made up of the accumulated interest on his bonds.
How often is interest paid?
Answer
Interest is not paid on the bonds during the life of the bonds. A bondholder who desires to receive interest on his bonds does so either upon the maturity of the bonds or upon his redemption of the bonds.
What is the advantage a bondholder obtains by introducing new bondholders?
Answer
For introducing a single new bondholder an existing bondholder earns 0.1% per month of the bond capital raised from the new bondholder. For introducing two new bondholders an existing bondholder earns 0.1% per month of the bond capital raised not only from the two new bondholders, but also from the bond capital raised from those these two bondholders introduce. In other words, for introducing two new bondholders an existing bondholder earns 0.1% per month of the bond capital raised from two generations of the introduced bondholders. For introducing three new bondholders an existing bondholder earns 0.1% per month of the bond capital raised from three generations of the introduced bondholders. For introducing four new bondholders an existing bondholder earns 0.1% per month of the bond capital raised from four generations of the introduced bondholders. For introducing five new bondholders an existing bondholder earns 0.1% per month of the bond capital raised from ALL generations of the introduced bondholders.
It should be evident that the existing bondholder who introduces at least five bondholders places himself or herself in a position where he or she is able to earn 0.1% per month of the bond capital raised directly or indirectly as a result of the introductions effected by himself or herself. In other words, the income such a bondholder can earn is not limited to a few generations of introduced bondholders, but limited only by the bond capital raised by the charity and the proportion of the human population desiring to become bondholders in the charity.
How is the bond capital raised by the charity used?
Answer
In the operations of the charity. These include not only its charitable activities, but also its investment activities.
How can a bondholder be sure that the charity's funds are properly utilised?
Answer
Under company law, to which the charity is subject, being incorporated under the Companies Act 1985, it must have a registered auditor independent of the charity to audit its accounts annually. Therefore the charity's auditor will indeed give the charity's bondholders his independent opinion once he has completed his audit.
If a bondholder sells all his bonds in Servants of Yahweh will he continue to earn any introduction fees based on his introduction activities prior to ceasing to be a bondholder?
Answer
No! The introduction fees for introducing new bondholders are paid only to existing bondholders. Therefore if one ceases to be a bondholder that one ceases to earn any introduction fees. It is therefore imperative that a person who desires to earn introduction fees should always remain a bondholder.
Is there a minimum value of bonds a bondholder must maintain to earn introduction fees, and if so, what is it?
Answer
Yes - £10 face value. As £10 is the minimum initial amount acceptable for becoming a bondholder, so also £10 is the minimum acceptable amount for earning introduction fees. Therefore a bondholder who desires to earn introduction fees must ensure that the value of his bonds is at least £10 face value. If a bondholder sells some of his bonds, and still desires to continue earning introduction fees, he must ensure that his remaining bonds are worth at least £10 face value.
How is the charity able to issue bonds with interest rates significantly higher than the interest rates offered on bank and building society savings accounts or investment funds?
Answer
The charity has high yielding investment opportunities in which to invest its funds. The high yields the charity receives on its investments are used both for payment of interest on the charity's bonds and also for the other operations of the charity.
Also, as the charity’s bonds are unsecured, their return can be compared to interest rates on unsecured lending by banks and other financial institutions. For example, credit card interest rates typically range from about 10% per annum to 30% per annum. It should therefore be observed that the return on the charity’s bonds is competitive when compared to similar financial instruments.
Isn't it morally wrong to pay or receive interest on investments?
Answer
One of the charity's objects is the advancement of the Christian religion. The charity therefore uses the words of Yah'shuah the Messiah (Jesus Christ) as the basis for assessing all moral matters.
With respect to the payment and receipt of interest on investments, Yah’shuah addressed this matter in a parable pertaining to the kingdom of heaven recorded in Matthew 25:14-30. He showed that it is appropriate for a person to receive an investment return on his investment, even double his original investment. He also showed in verse 27 that it is appropriate for one to invest one's money with those who pay interest that one may receive interest on the money invested. It is therefore not morally wrong to pay or receive interest on investments.
In this light the charity both pays and receives interest on investments, paying its bondholders interest and receiving interest on its investments placed with other interest paying entities.
How much of the charity's bonds should one buy?
Answer
The decision on how much of the charity's bonds an investor buys is the investor's, and not the charity's. The charity does not offer investment advice, as it is not authorised to do so under the Financial Services and Markets Act 2000.
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